AeroVironment, Inc. (NASDAQ:AVAV) stock fell 1.52% (As on December 7, 11:34:53 AM UTC-4, Source: Google Finance) after the company posted lower than expected results for the second quarter of FY 23. Gross margin for the second quarter of fiscal 2023 was $25.9 million, a decrease of 39% from the second quarter of fiscal 2022 gross margin of $42.5 million. The decrease in gross margin reflects lower product margin of $9.2 million and lower service margin of $7.4 million. As a percentage of revenue, gross margin decreased to 23% from 35%. The decrease in gross margin percentage was primarily related to unfavorable product mix and accelerated depreciation charges related to the anticipated completion of certain MUAS COCO site locations of $4.5 million. As of October 29, 2022, funded backlog was $293.1 million, as compared to $210.8 million as of April 30, 2022. As of November 26, 2022, funded backlog was $388.2 million. $86 Million FMS order was received in November.

AVAV in the second quarter of FY 23 has reported the adjusted loss per share of 27 cents, missing the analysts’ estimates for the adjusted loss per share of 5 cents. The company had reported 9 percent decline in the adjusted revenue to $111.6 million in the second quarter of FY 23, missing the analysts’ estimates for revenue of $114.2 million. The decrease in revenue reflects a decline in product sales of $8.7 million and service revenue of $1.8 million. The overall decrease in revenue was primarily due to a decrease in revenue in the Small UAS segment of $28.0 million, partially offset by an increase in revenue from the Tactical Missile Systems (“TMS”) segment of $12.7 million and an increase in customer-funded research and development revenue of $4.2 million.

Looking forward, the company is raising its FY23 revenue forecast to a new range of $505 million to $525 million, up from its prior guidance looking for $490 million to $520 million in revenue for the 12 months ending April 30 and continuing to straddle Wall Street estimates expecting $513.5 million.

It also sees non-GAAP net income this year to be between $1.26 to $1.58 per share. Analysts are looking for a normalized FY23 profit of $1.56 per share. For the fiscal year 2023, Non-GAAP adjusted EBITDA is expected to be of between $84 million and $92 million